The Conversation: Jean-Pascal Tricoire, Chairman & CEO, Schneider Electric

The global energy sector is witnessing a paradigm shift from fossil fuel-based energy with $755 billion investments in green energy in 2021, up from $595 billion in 2020 and more than thrice the $264 billion in 2011. Jean-Pascal Tricoire, CEO, Schneider Electric, believes the transition will be driven by digitisation and automation for higher energy efficiency. He says, in India manufacturing and data centres have digitised in a big way, but real estate and infrastructure have a lot of catching up to do. Interview by Ashutosh Kumar.

This edited Q&A has been condensed for space and clarity.

Key Trends

Transition to green, environment friendly energy production and consumption is a global phenomenon. What are the emerging trends and how are producers, suppliers and consumers adapting?

Energy transition and de-carbonisation are now being reinforced for energy security. De-carbonisation and energy security go together. We are focusing on two fundamentals. First is digitisation for more efficiency everywhere, right from homes and industry to cities, buildings and infrastructure. Higher efficiency at lower levels of consumption will be based on digitisation. Second is de-carbonisation ,supported by electrification. At the end of the day, de-carbonisation entails eliminating combustion. The only way to do this is to ensure production of cleaner electricity.

There has been a global shift towards sustainability, energy security and efficiency via digitisation and lowering of dependence on imported fossil fuels for power generation. So, sustainability, digitisation and electrification are the core strategies.

What is the scope of digital solutions for energy efficiency and sustainability? What are the sectoral trends in adoption of digitisation for higher efficiency?

We see a future which is connected. Let me give you a few examples. One of our companies in India is developing a solution for rural agriculture that will use solar energy to power pumps to irrigate fields. The aim is to make life of farmers easier. The entire system is connected to a simple 3G/4G network. One can trigger the pump remotely. If there is a problem, alarm sets off. Online tracking helps the farmer trouble-shoot. Information flows in real time. Digitsation can ensure higher energy efficiency and better performance.

We expect buildings to use automated digital solutions for becoming more energy efficient. We can achieve 30% higher energy efficiency in every building in the world. We are increasing the number of ‘net zero’ buildings globally. These buildings use digitisation for energy efficiency and smart use of electricity.

India Digitisation

Which segment of the economy offers big scope for digitisation? How is the Indian market reacting?

There is huge scope for digitsation in industry. It has been using fossil fuels for long. It will keep using some fossil fuels but is now treading the path of digitisation. Our industrial software company, AVEVA, has a huge R&D presence in India. We help in complete digitisation of the plant right from designing to commissioning and operation. One can replicate what is happening at the plant on Cloud accessible to all stakeholders such as suppliers and utility services providers. This helps them intervene in real time to improve energy efficiency and reduce wastage.

Another area is data centres. In India, developments around smart cities are very relevant. We are a provider of digital systems for 10 smart cities. By leveraging digital platforms that we have engineered for very complex plants, we are addressing issues of smart grid, smart electrical network and smart water as well as smart transportation and smart buildings. It is one of the growth areas in India.

Schneider acquired L&T’s electrical and automation business in 2020. Have the synergies been achieved? How will it boost the product mix?

It was a major acquisition, and one of the largest in the history of Schneider. The teams have been working together for the past year and a half. The integrations took place during the pandemic, which was not the easiest of times. The first value it offers is in E&A (electrical & automation). Schneider is present in 100 countries. We will start exporting E&A products through our platform. That is very exciting.

If digitisation is key, how ready are stakeholders?

Past ten years have been an inflection period. And past two years have been a period of super inflection. Internet has revolutionised the way we live and work together. From 2007, we have seen unfolding of the second episode of internet, which is internet of things. Everything is getting connected.

If you focus on India, from the simplest application that I mentioned, the farming systems, to the most complex like Reliance’s Jamnagar refinery, one thing is common—people want to be connected. And Covid-19 has been an accelerator by showing that people who were connected could continue operating. Those who were not connected faced problems.

For our customers, digitisation of design and operations became imperative. It is happening in every sector right from industry to farming to data centres. India’s big asset is competency in digitisation. It’s a perfect combination of large country, appetite for technology and competency in digitisation.

Schneider acquired L&T’s electrical and automation business in 2020. Have the synergies been achieved? How will it boost the product mix?

It was a major acquisition, and one of the largest in the history of Schneider. The teams have been working together for the past year and a half. The integrations took place during the pandemic, which was not the easiest of times. The first value it offers is in E&A (electrical & automation). Schneider is present in 100 countries. We will start exporting E&A products through our platform. That is very exciting.

India Plans

What is the size of the market that India offers?

We are at the beginning. It all depends. Data centres, refineries and cement industry—an energy guzzler which requires high efficiency—have adopted digitisation. That said, there are many segments of the economy like cities, homes and buildings which are still not connected. Most installations in rural areas are not connected.

Which sectors have been more forthcoming in India as well as global markets and which are the laggards?

The Indian market is a fair reflection of the world. Data centres are the most digitised. And it’s not only the big data centres. Since you are putting more things on Cloud, every building, every retail shop, every place will have its own small data centre. Second one is industry which, from the beginning, has been obsessed with reliability, productivity and electricity sustainability. The laggards, however, are buildings, infrastructure.

Why is it so and what is the way ahead?

People do not necessarily know the potential of technology. Also, there are multiple stakeholders in these areas, unlike a data centre or an industry. When it comes to buildings, the architect, the builder, the facility manager, and the person who finally stays there are not one and the same. The beneficiary of energy efficiency is not the one who has built the building.

In a residential building, for example, 90% of the cost is incurred after it is constructed. And very often, the process is optimised to reduce cost of construction even if it costs a lot more and emits much more carbon afterwards. Here, automation allows you to have a digital image of the building so that you know at the beginning that it may cost 5% more, which you pay back in three years after saving money. We need to think in terms of lifecycle.

What are your plans for India?

We believe we are the most global company in our universe. Our biggest business region is Asia, second is North America, and third is Europe. While we are conscious that the world is global, we also believe that the solution you put in place in Europe has to be different from what will work in North America, China, and very different from what will work in India.

From the beginning, we decided to have a very strong local footprint. At 30,000, we have the highest number of people in India. We have 5,000 people in R&D, the largest, of which 60% are in pure software and digital. We lead digital initiatives to a large extent from India. We have a full production set-up here; 80-90% of what we sell in India is made here. What is more important is that 60% of what we sell in India is designed in India; it is also exported. India is not a back-office for us. We are plugged into many local companies as suppliers. In fact, 70% of what we do is done with local suppliers.

How do you align with India’s policy of Atma Nirbhar Bharat?

On Atma Nirbhar Bharat , we participate in three ways. First, Schneider is a great example of India exporting to the world. We help our suppliers get international certification to be able to supply to markets like U.S. and China. We produce high-tech products. In Bangalore, we produce the most advanced UPS devices that go into most advanced data centres globally. The second contribution is in modernising and industrialising India with our strong presence in industrial automation, power distribution for industry and software for industry 4.0, with a lot of local development.

The third contribution is ensuring that maximum number of plants, farms and homes produce their own energy and build micro grids. We have just launched an entity, GreeNext, which is providing a ‘micro grid in a box’ for buildings.